GameSquare Wrote Down $8.1M on Complexity Note Months Before Shutdown

GameSquare Holdings disclosed in its annual report filed April 8 that it had recorded an $8.1 million reserve on a promissory note tied to Complexity Gaming, expecting to recover only about $500,000 of the $9.5 million principal.

The timeline reveals a significant deterioration in the note's status. GameSquare's quarterly report for the period ended September 30, 2025 stated that "no allowance for credit losses had been recognized" on the note. Seven months later, the company's April filing showed the reserve had ballooned to $8.1 million.

Jason Lake, Complexity's founder and former CEO, announced the organization's shutdown on September 23, 2026. In a video posted to X, Lake said the decision came "at the end of 2025" after assessing the business landscape and capital-raising prospects. "We surveyed the landscape, surveyed where the business was at, and prospects for raising capital to pay off the seller-held note, and decided the best thing to do was to shut it down in an orderly and professional way," Lake said, according to Dot Esports.

The note represented most of the purchase price in Complexity's sale. Global Esports Properties LLC, an investor group led by Lake, agreed in March 2024 to buy Complexity for $10.36 million. Only $750,000 was paid in cash at closing; the remainder came through a secured subordinated promissory note with a principal of $9,607,693 bearing 3 percent annual interest and due in full within 36 months.

The note's terms created significant constraints on Lake's group. The buyer was required to pay GameSquare 50 percent of any gross proceeds above $500,000 from third-party debt financing or equity sales. This meant half of any new capital raised would have gone to GameSquare rather than into the team's operations.

Complexity's intellectual property has since been transferred back to GameSquare. The company's filings do not clearly indicate whether this transfer occurred through enforcement of the security agreement backing the note or through a settlement, though GameSquare's April report mentioned expecting to collect the remaining $500,000 through settlement. No settlement details have appeared in subsequent filings.

The write-down completes a financial cycle for GameSquare. The company acquired Complexity in 2021 in an all-stock deal valued at $26.7 million, then sold it in 2024 ahead of its acquisition of FaZe Clan. CEO Justin Kenna cited league ownership rules at the time, noting that "many leagues have rules around ownership of multiple teams." GameSquare recognized a $3.0 million gain on the 2024 sale.

Remaining questions include what GameSquare intends to do with the Complexity brand and whether the company can recover more value from the name than it did from the note.